Manufacturers, others reject fuel imports, warn of economic setback

The Organized Private Sector of Nigeria (OPSN), led by the Manufacturers Association of Nigeria (MAN), has deepened opposition to any move to reinstate petrol import licences, warning that such a policy could undermine local industry, weaken the naira and stall the country’s fragile economic recovery.

This is coming on the heels of the recommendations in the World Bank’s latest Nigeria Development Update suggesting that reopening fuel importation could ease inflationary pressures.

But the Manufacturers Association of Nigeria (MAN) has firmly rejected the proposal, describing it as “a recipe for deindustrialisation and economic retrogression.”

In a statement issued in Lagos, the association’s Director-General, Segun Ajayi-Kadir, argued that resorting to imports would reverse recent gains in domestic refining and deepen Nigeria’s dependence on foreign markets.

National Bureau of Statistics (NBS) data show that inflation remains elevated, largely driven by exchange rate volatility, energy costs and supply chain challenges.

Manufacturers warn that increasing fuel imports would heighten demand for scarce foreign exchange, further weakening the naira and driving up production costs and ultimately worsen inflation rather than contain it.

Ajayi-Kadir stated that “Nigeria’s inflation is fundamentally cost-push and heavily influenced by exchange rate instability,” stressing that a return to fuel importation would trigger wider economic distortions.

Beyond macroeconomic concerns, business leaders say the policy could have far-reaching consequences for Nigeria’s industrial base.

The Lagos Chamber of Commerce and Industry (LCCI) has highlighted similar concerns, warning that policies that increase FX demand without boosting supply could destabilise the economy and erode business confidence.

The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) warned that renewed dependence on imported fuel would divert capital away from domestic production and reduce incentives for investment in local refining and manufacturing.

Equally, the Nigeria Employers’ Consultative Association (NECA) stated that inconsistent policies could discourage investors and threaten job creation across key sectors.

The stakeholders also echoed that energy accounts for a significant share of manufacturing costs, with many firms relying on diesel and petrol due to unreliable grid power, arguing that any policy that exposes the sector to exchange rate shocks, could further squeeze margins and force companies to scale down operations.

Industry stakeholders insist that supporting Dangote refinery and local capacity, through policies such as the naira-for-crude initiative offers a more sustainable pathway to price stability and economic growth.

MAN warned that reopening import channels would “undermine domestic refining capacity and disincentivise further investment,” potentially reversing what it described as one of the most significant structural shifts in Nigeria’s energy sector in decades.

Despite the strong opposition, some stakeholders within the Organised Private Sector of Nigeria also acknowledged that limited importation could provide short-term relief by increasing supply and moderating fuel prices.

They argue that lower fuel costs could ease transportation expenses and help curb inflation in the near term and maintained that such measures must be carefully managed to avoid long-term damage to domestic industries.

Energy experts have also criticised recent recommendations by the World Bank urging Nigeria to deepen fuel imports and fully liberalise its downstream petroleum sector, warning that the proposal could reverse progress made under local refining reforms.

An energy economist and professor, Ken Ife, faulted the recommendation during a televised interview, saying parts of the World Bank’s Nigeria Development Update were sound but its fuel import stance was damaging.

The Centre for the Promotion of Private Enterprise (CPPE) has cautioned against a policy proposed by the World Bank to increase the importation of petroleum products and food, warning that it could reverse Nigeria’s recent economic gains.

The Chief Executive Officer of CPPE, Dr Muda Yusuf, said the recommendation, contained in the World Bank’s Nigerian Development Update, was “deeply troubling and fundamentally misaligned with Nigeria’s current economic realities and reform trajectory.”

He said, “At a time when the country is making measurable progress in restoring macroeconomic stability, evidenced by improving foreign reserves, moderating inflation, a more stable exchange rate regime, and growing capacity for the export of refined petroleum products, the policy priority should be to consolidate these gains, not undermine them.”

Yusuf stressed that Nigeria was transitioning towards self-sufficiency in petroleum supply through private investments in domestic refining, warning that increased imports would weaken this momentum.

The Federal Government now faces a delicate balancing act between tackling immediate inflationary pressures and protecting long-term industrial growth.

Stakeholders across the private sector are urging policymakers to prioritise structural reforms, including strengthening local refining, improving power infrastructure and reducing bottlenecks facing manufacturers.

Many industry leaders have the message for the government that Nigeria’s economic stability cannot be built on import dependence, hence as the debate on this issue intensifies, the outcome of this policy decision is expected to have far-reaching implications for the manufacturing sector, investor confidence and the Nigerian economy